The project is expected to provide 49.5 megawatts of power in Humboldt County in northwestern Nevada. John Hancock Financial Services will finance the loan and 80 percent of the amount will be guaranteed by the Department of Energy.

"The United States leads the world in geothermal electricity production, with just over 3,000 megawatts of installed capacity," Secretary Chu said in a statement. "Our support of the Blue Mountain project demonstrates our continued commitment to realize the potential in geothermal so that we can achieve our nation's clean energy goals."

While the government tries to manage the fallout from the Gulf of Mexico oil spill, it is beefing up support for an energy source that has been found to be a cost-effective renewable, according to a NYU study, as well as the least land-intensive renewable, according to a Northwestern University study.

Blue Mountain is just one project that is starting to see government-backed funds. Last week, the DOE announced a $102.2 million conditional commitment for a loan guarantee to U.S. Geothermal, Inc. to build a 22-megawatt geothermal power plant in Malheur County, in southeastern Oregon. The planned project is expected to be operational in 2012.

The project uses a supercritical binary geothermal cycle to extract energy from the rock and fluids below ground, which is meant to be more efficient than traditional geothermal systems because it is more efficient in extracting heat from the hot water to create more energy.

Energy production using any source is not cheap, but geothermal is particularly expensive. It is estimated a company needs $30 million to $40 million just to get started on a project. Drilling the wells can cost millions per hole, and every well does not necessarily deliver energy in the long term.

Still, despite the costs, geothermal is a sleeping giant in renewables, accounting for about 4.5 percent of the state of California's total power as of 2007. With newer technologies, there are thought to be various other accessible geothermal sources in the western U.S. and Hawaii.

To help move the industry along, the DOE announced $20 million last month for research, development and demonstration of geothermal technologies, including "non-conventional" geothermal technologies, including low-temperature fluids (up to 300° Fahrenheit), geothermal fluids recovered from oil and gas wells, and highly pressurized geothermal fluids.

The DOE also shelled out more than $330 million last fall to 123 geothermal projects, which will be matched by private funds. But the government isn't the only funding source to turn its attention to geothermal -- Google has also recently invested in a number of geothermal startups. The question now is whether venture capitalists will follow.